New Zealand’s manufacturing sector experienced a second consecutive month in contraction, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for January was 49.6 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). While this was up 0.4 points from December, the sector remains in contraction.
BusinessNZ’s executive director for manufacturing Catherine Beard said that the mixed results for 2019 have continued to spill over into 2020.
“Looking at the key sub-index values, new orders (50.6) is still only just managing to keep its head above water, while production (49.9) has now been in contraction for three consecutive months. Employment (46.9) also took a hit to reach its lowest mark since July 2019.”
“The proportion of negative comments in January (52.5%) picked up from December (44.9%). In terms of the comments made, there were still seasonal effects at play, most notably the Xmas/holiday break. However, there was also some discussion around uncertainty due to the coronavirus.”
BNZ Senior Economist, Craig Ebert said that “in the context of the latest global ructions – this time related to the COVID-19 virus – January’s PMI could arguably be read as a relatively decent outcome. At the same time, it is surely too early for the PMI to capture the economic consequences of the virus”.